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Report to the Chairman, Committee on Government Reform, House of
Representatives:
June 2006:
Doe Contracting:
Better Performance Measures and Management Needed to Address Delays in
Awarding Contracts:
GAO-06-722:
GAO Highlights:
Highlights of GAO-06-722, a report to the Chairman, Committee on
Government Reform, House of Representatives
Why GAO Did This Study:
The Department of Energy (DOE), the largest civilian contracting agency
in the federal government, spends over 90 percent of its annual budget
on contracts to operate its facilities and carry out its diverse
missions. Federal law and regulations outline the steps DOE must follow
in planning and carrying out the contract award process and emphasize
the importance of awarding contracts in a timely manner. Several of
DOE’s recent contracts have taken much longer than anticipated to
award. GAO was asked to determine (1) the extent to which DOE has
experienced delays in awarding contracts and factors contributing to
delays, (2) the impacts of any such delays, and (3) the extent to which
DOE has taken steps to address the delays.
What GAO Found:
Delays in awarding DOE contracts occurred in most of the 31 contracts
that GAO reviewed. In fiscal years 2002 through 2005, DOE awarded 131
contracts valued at $5 million or greater; the 31 contracts GAO
reviewed were affiliated with DOE’s three largest component
organizations and represented about 73 percent of the dollars awarded.
None of the 24 contracts awarded competitively was awarded by the date
planned in DOE’s schedule, with 23 of the contracts awarded between
several weeks and 4-1/2 years later than the planned date. Of the 7
contracts awarded without competition, 6 were awarded on time or nearly
so, with the remaining contract awarded 2 months late. Delays in
awarding contracts occurred, in part, because DOE had to modify its
approach after beginning the contract award process. At least some of
the delays were avoidable, such as when DOE had to rework a contract
award to correct errors.
Delays in awarding contracts could increase costs both to DOE and
companies competing for DOE work. Because the department does not track
its costs for awarding contracts, it was not feasible to quantify the
impact of these delays. Companies competing for DOE’s work may also
face increased costs when contract awards are delayed, such as the
costs associated with ensuring that key personnel identified in
proposals continue to be available. Increased costs and delays may
affect the willingness of companies to compete for future DOE work,
although the actual impact is unknown.
Until recently, DOE had not been addressing delays in awarding
contracts because incomplete performance data indicated that most of
the contracts were awarded in a timely manner. In late 2005, DOE began
several efforts to improve its contract award process, including
implementing improved measures of contract award timeliness and
restructuring the Office of Environmental Management to strengthen
management of the contracting process. However, two concerns could
limit the effectiveness of these efforts: (1) the efforts do not
encompass all of DOE’s contract awards and (2) DOE does not have a
systematic method of identifying and disseminating lessons learned and
best practices from past or current contract awards.
Figure: Timeliness of 31 DOE Contract Awards, Fiscal Years 2002 through
2005:
[See PDF for Image]
Source: GAO analysis of DOE contract files.
[End of Figure]
What GAO Recommends:
GAO recommends that DOE (1) develop more accurate and comprehensive
performance measures for the timeliness of its contract awards and (2)
establish a consistent system for identifying and sharing lessons
learned and best practices on contract awards. In commenting on the
report, DOE generally agreed with the recommendations but raised
concerns about GAO’s sampling methodology, as well as GAO’s
characterization of late contract awards as delayed and DOE’s
performance measures as incomplete. GAO believes that the methodology
and conclusions are correct.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-722].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gene Aloise, 202-512-
3841, aloisee@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
Delays Occurred in Most of the Contract Awards We Reviewed:
Delays in Awarding Contracts Could Increase Costs to the Government and
Industry and Affect Future Competition:
Efforts to Address the Causes of Delays Are in Early Stages, but
Concerns Remain about the Potential Effectiveness of DOE's Planned
Actions:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Energy:
Appendix III: GAO Contact and Staff Acknowledgments:
Table:
Table 1: Value of DOE Contracts Selected in the Nonprobability Sample,
by Location:
Figure:
Figure 1: DOE's Timeliness in Awarding 31 Contracts from Fiscal Years
2002 through 2005:
Abbreviations:
DOE: Department of Energy:
EM: Environmental Management:
NNSA: National Nuclear Security Administration:
June 30, 2006:
The Honorable Tom Davis:
Chairman:
Committee on Government Reform:
House of Representatives:
Dear Mr. Chairman:
The Department of Energy (DOE), the largest civilian contracting agency
in the federal government, spends over 90 percent of its annual budget
on contracts to operate its laboratories, production facilities, and
environmental restoration sites. In fiscal year 2005, DOE spent
approximately $22.9 billion on contracts for mission-related activities
such as maintaining the nation's nuclear weapons stockpile, cleaning up
radioactive and hazardous wastes, and conducting complex scientific
research; and for mission-support activities such as purchase of
computer equipment and maintenance and repair of buildings. Almost 90
percent of these fiscal year 2005 contracting dollars--or about 80
percent of DOE's entire budget--were directed to DOE's "facility
management contractors" that carry out most of the department's mission-
related activities.
For over a decade, GAO, DOE's Office of Inspector General, and others
have criticized DOE's contracting practices, particularly for
inadequate management and oversight, and for failure to hold its
contractors accountable for results. The poor performance of DOE's
contractors has led to schedule delays and cost increases on many of
the department's major projects. Since 1990, such problems have led us
to designate DOE contract management--defined broadly to include both
contract administration and management of major projects--as a high-
risk area for fraud, waste, abuse, and mismanagement.
DOE's contracting activities are governed by federal law and
regulations, including the Federal Acquisition Regulation and the
Department of Energy Acquisition Regulation. These regulations and
related DOE guidance outline the steps that should be followed in
planning and carrying out the process of awarding its contracts.
Furthermore, federal law generally requires that federal agencies use
full and open competition in selecting a contractor, as part of the
process for ensuring the best value to the government. However, there
are certain exceptions to this requirement, such as an urgent need to
obtain the goods or services, when DOE may award a contract without
full and open competition.
Awarding competitive contracts includes a series of required steps that
generally involve planning the contract award process, soliciting
proposals from private companies and/or public organizations, and
evaluating those proposals to select the company that will provide the
goods or services at the best value to the government. Planning the
contract award process generally involves identifying needed goods or
services and the best approach for obtaining them. DOE guidance
generally requires a formal written plan for carrying out this process
for contracts valued at $5 million or greater. The plan must describe
the overall strategy for obtaining the goods or services, including the
planned approach for soliciting and evaluating proposals. Key decisions
outlined in the plan include whether to target the solicitation to
small businesses and what factors to consider in evaluating proposals
submitted by companies.
Although federal regulations do not specify how long the contract award
process should take, the regulations state that the purpose of planning
the contract award process is to ensure that the government obtains the
needed goods or services in the most effective, economical, and timely
manner. Therefore, written plans for carrying out the award process
must include milestones for completing the steps in the process, such
as when the agency plans to solicit and evaluate proposals and make the
award. Developing and adhering to these schedules can help ensure that
the department conducts the process efficiently and can help companies
make informed business decisions regarding the allocation of their
resources and whether to compete for a contract.
In addition to specifying how the contract award process should be
carried out, the laws and regulations that govern contracting with the
federal government are designed to ensure that federal contracts are
awarded fairly. On occasion, companies that bid on government contracts
may believe that a contract has been or is about to be awarded
improperly. These companies may attempt to informally resolve concerns
with the contracting officer, file a protest with the federal agency
awarding the contract, or file a formal bid protest with the U.S. Court
of Federal Claims or GAO.[Footnote 1] In deciding bid protests, the
essential issue is whether the agency making the award has complied
with federal laws and regulations that govern contracting.
Several of DOE's recent contract awards have taken much longer than
anticipated and have been subject to bid protests. In this context, you
asked us to review how DOE plans for and carries out its contract
awards. This report discusses (1) the extent to which DOE adhered to
its planned dates for awarding contracts and the factors contributing
to any delays, (2) the impacts of any delays in awarding contracts, and
(3) the extent to which DOE has taken steps to address delays in its
contract award process.
To determine DOE's timeliness in awarding its contracts and the factors
contributing to delays, we analyzed file documents from a
nonprobability sample of contracts valued at $5 million or greater that
DOE awarded during fiscal years 2002 through 2005. To obtain this
sample, we selected contracts for goods and services that were awarded
by DOE's three largest component organizations--the Offices of
Environmental Management and Science and the National Nuclear Security
Administration (NNSA)--and from field locations with high levels of
contracting activity. The contracts sampled from these field locations
comprised about 73 percent of total contracting dollars for new awards
of $5 million or greater during fiscal years 2002 through 2005. To
determine whether the contract awards had been delayed, we compared the
planned award date specified in DOE's schedule for awarding the
contract with the date the contract was actually awarded. Federal
regulations stress the importance of timeliness in awarding contracts,
but do not establish specific timeliness standards or measures.
Therefore, we used adherence to the milestones established in the
written plan as a consistent measure of timeliness and one indicator of
how well the contract award process was being managed. To determine the
overall length of time for a contract award, we generally compared the
date the written plan for the contract award was approved with the date
that the contract was awarded. For the contracts included in our sample
for review, we also obtained and analyzed information on bid protests
filed with GAO. To determine the extent to which DOE has taken steps to
address any delays, we interviewed officials at DOE headquarters and
six of the field locations that were involved in contract awards. In
addition, we reviewed agency policies and guidance on its contract
award process, as well as documentation on any efforts to improve the
process. A more detailed description of our scope and methodology is
presented in appendix I. We performed our work between July 2005 and
June 2006 in accordance with generally accepted government auditing
standards.
Results in Brief:
DOE awarded most of the contracts we reviewed months to years later
than the planned award dates. In fiscal years 2002 through 2005, DOE
awarded 131 contracts valued at $5 million or greater; the 31 of these
contracts we reviewed were affiliated with DOE's three largest
component organizations and represented about 73 percent of the dollars
awarded. Specifically, none of the 24 competitive contracts was awarded
by the planned date specified in DOE's schedule for carrying out the
contract award process. DOE awarded one of these contracts less than 1
month after the planned award date but awarded the remaining 23
contracts between several weeks and 4-1/2 years after the planned award
date. In contrast, of the 7 contracts DOE awarded without competition,
6 contracts were awarded on time or nearly so, with the remaining
contract awarded 2 months late. DOE encountered delays throughout the
contract award process for various reasons. For example:
* DOE took over 4 years to successfully award a $1.6 billion contract
for nuclear waste cleanup services at DOE's Hanford site in Washington
after revising and reissuing a solicitation in response to a bid
protest.
* DOE was 4 months behind its scheduled award date for two contracts
for the conceptual design of a waste processing facility at the
Savannah River site. The delay occurred because the department decided
to enter into discussions with companies after proposals were
submitted, even though DOE had not allowed any time for this activity
in its schedule for carrying out the contract award.
* DOE was 4 months late in awarding a contract to manage and operate
the Berkeley National Laboratory because it took longer than expected
to obtain approval of the draft solicitation from DOE headquarters
officials.
It is unclear the extent to which delays in the contracts that we
reviewed could have been avoided, or were due to factors beyond DOE's
control. However, some delays were clearly avoidable, such as when DOE
took corrective action in response to bid protests because the
department failed to follow its contract award process.
Delays in awarding contracts could increase costs to both DOE and the
companies that are competing for the work and could also affect the
willingness of companies to compete for future DOE contracts. Because
the department does not track its costs for awarding individual
contracts, it was not feasible for us to quantify the impact of delays
on DOE's costs. However, DOE headquarters procurement and program
officials acknowledge that there may be additional costs associated
with contract awards that experience delays and added that companies
competing for these contracts could face increased costs as the process
takes longer than expected. Specifically, in addition to investing time
and resources in developing proposals, once a company submits a
proposal to DOE, the company is generally required to ensure that the
key personnel identified in the proposal continue to be available until
the decision is made and the contract awarded. For example, according
to file documents for a contract to provide infrastructure services at
DOE's Paducah, Kentucky, site, several of the companies competing for
that contract told DOE that--in addition to the high costs of preparing
a proposal--there were costs associated with retaining key personnel
during the year-long delay that occurred before DOE awarded the
contract. Increased costs and the length of time it takes DOE to award
a contract also have the potential to affect competition for future DOE
work. Although DOE officials who oversee the contracting process told
us that they have not yet seen a decline in the number of companies
competing for contracts, they agree that this is a potential concern.
In July 2005, when we began our work, officials overseeing DOE's
contract award process generally were not taking steps to address
delays in awarding those contracts. One of the main reasons that DOE
was not addressing the delays was that DOE's performance data measured
only the final steps in the contract award process and indicated that
most of the contracts were being awarded in a timely manner. In late
2005, partly in response to criticisms from GAO and others, DOE began
to take steps to improve its contract award process. These efforts
involved (1) an initiative with the Office of Management and Budget to
address the GAO determination since 1990 that DOE's contract management
has been at high risk for fraud, waste, abuse, and mismanagement; (2) a
restructuring of DOE's Office of Environmental Management to increase
the focus on planning and management of contract awards; and (3)
specific steps by NNSA and DOE's Office of Procurement and Assistance
Management to implement improved measures of the timeliness of the
contract award process. Although these efforts are constructive and
helpful, we have two main concerns that could limit DOE's effectiveness
in improving the timeliness of contract awards. First, the efforts do
not reflect a comprehensive approach within the department to improve
the timeliness of contract awards. Various programs and organizations
within DOE are initiating these efforts, and we found that some of
DOE's contracts were excluded from the improvements. Second, as DOE
implements more comprehensive measures of timeliness and analyzes the
resulting performance data to identify the causes of delays, DOE
currently does not have a systematic way to develop and disseminate
best practices or lessons learned, despite the fact that federal
regulations require agencies to implement knowledge-sharing procedures.
Instead, department officials who oversee contracting efforts said that
best practices and lessons learned are sometimes shared informally
during the contract award process or at conferences. However, officials
who plan and carry out contract awards said that the information was
sometimes not available to them or may have come too late in the award
process to be beneficial.
To help ensure that DOE's contract award process is efficient and
effective and that DOE is obtaining the best value for the government,
we are recommending that DOE take steps to (1) develop more accurate
and comprehensive performance measures for the timeliness of its
contract awards and (2) establish a consistent system for identifying
and sharing lessons learned and best practices on contract awards.
DOE generally agreed with our recommendations and outlined steps that
the department has taken or will take in response. However, DOE raised
concerns about (1) using a nonprobability sample to draw conclusions
about DOE's contracting practices, (2) our description of contracts
awarded later than planned as delayed, and (3) our statement that DOE's
performance measures for timeliness were incomplete. We believe our
sampling methodology was appropriate because the 31 contracts in our
nonprobability sample represented about 73 percent of the total dollars
DOE awarded during the 4-year period for contracts valued at $5 million
or greater. Furthermore, our report does not use the sample results to
make overall statements about DOE's contracting practices. Regarding
our description of contracts awarded later than planned as delayed,
federal regulations emphasize the importance of timeliness in awarding
contracts, and we believe that awarding contracts later than planned is
accurately characterized as a delay. Regarding the completeness of
DOE's performance measures for timeliness in awarding contracts, we
continue to believe that DOE's performance measures could be improved
by being applied to all contracts for which a written plan and schedule
are required.
Background:
DOE has numerous sites and facilities around the country where the
department carries out its missions, including developing, maintaining,
and securing the nation's nuclear weapons capability; cleaning up the
nuclear and hazardous wastes resulting from more than 50 years of
weapons production; and conducting basic energy and scientific
research, such as mapping the human genome. DOE relies on contractors
to operate its facilities and accomplish its missions. This mission
work is carried out under the direction of NNSA and DOE's program
offices, including the Offices of Environmental Management and Science.
The Federal Acquisition Regulation provides the basic guidelines that
all federal agencies must follow in planning for and carrying out the
process for awarding contracts. DOE, like most federal agencies, has
supplemental regulations that it has set forth in the Department of
Energy Acquisition Regulation to recognize requirements unique to the
department, such as maintaining nuclear safety and security.
Furthermore, in the mid-1990s, DOE's Office of Procurement and
Assistance Management developed the DOE Acquisition Guide that provides
further information on contract award planning activities, including
meeting federal requirements for competition, establishing evaluation
criteria, and selecting the appropriate contract type.
In planning and carrying out competition and award of contracts, there
are three main phases, and each phase generally includes several steps.
* Planning. This phase involves identifying the mission need for the
contract, alternatives for obtaining the goods or services, estimated
costs, and any program or technical risks. Federal regulations state
that the agency should use an integrated team approach--involving all
personnel responsible for significant aspects of the contract award
process--to developing the plan and associated milestone schedule. The
plan should also identify the appropriate contract type for the work,
considering the alternatives and risks. In addition, a selection
official is designated, and an evaluation board is formed to carry out
the contract award process.
* Developing the solicitation. Generally, the evaluation board, with
input from technical and other advisors, develops a statement of work
for the contract and criteria that will be used to evaluate proposals
submitted by companies. During this phase, DOE may also do market
research to determine if sources capable of meeting the agency's needs
exist. Finally, DOE issues the request for proposals that describes the
work to be done, provides instructions to companies on how and when to
submit their proposals, and describes the criteria that will be used to
evaluate the proposals and select a contractor.
* Evaluating proposals and awarding the contract. Once proposals are
received, the evaluation board evaluates the proposals against the
established criteria. Evaluation criteria may differ for each contract,
but generally include factors such as a company's proposed technical
approach; past performance on DOE, other federal agency, and commercial
contracts; the proposed cost; and the qualifications of the key
personnel identified in the proposal. During this phase, DOE may
determine that it is necessary to hold discussions with individual
companies about issues raised during the evaluation of their proposals.
Based on a written report of the evaluation board that outlines the
strengths and weaknesses of each proposal, the selection official
should select a proposal that represents the best value for the
government. The DOE contracting officer, who has generally provided
contracting support to the evaluation team, then awards the
contract.[Footnote 2]
The Competition in Contracting Act of 1984 provides statutory authority
for GAO to decide cases involving bid protests. GAO's bid protest
decisions address specific allegations raised by unsuccessful companies
claiming that particular contracting actions were contrary to federal
laws and regulations. A bid protest may be filed by an "interested
party," defined as an actual or prospective bidder or offeror with a
direct economic interest in the contract. Unless the protest is
dismissed at the outset because it is procedurally or substantively
defective, such as if the protest was not filed in a timely manner, the
contracting agency is required to file a report with GAO responding to
the protest. GAO will consider the facts and legal issues raised and is
required to resolve the protest not later than 100 days from the date
the protest was filed, either by sustaining the protest and
recommending that the agency take corrective action, or by denying or
dismissing the protest.[Footnote 3]
DOE's Office of Procurement and Assistance Management and NNSA's Office
of Acquisition and Supply Management establish policies and guidance
for awarding contracts according to federal and departmental
regulations. Officials from DOE's programs, such as NNSA and the
Offices of Environmental Management and Science, usually manage the
contract planning and award process since they are most knowledgeable
about the work needed and are ultimately responsible for managing the
work and overseeing the contracts. Other organizations within DOE work
with the program officials to plan and carry out the contract award
process by providing contracting, legal, and technical advice and
assistance. DOE's Offices of General Counsel and Procurement and
Assistance Management review, evaluate, and approve key documents
during the entire process, such as the initial plan for the contract
award process and the request for proposals.
Delays Occurred in Most of the Contract Awards We Reviewed:
Most of DOE's 31 contract awards that we reviewed experienced delays
when comparing the planned and actual award dates for the contracts.
The 24 contracts awarded with competition faced delays of months to
years; of the 7 contracts awarded without competition, 6 were awarded
on time or nearly so. Delays occurred throughout the contract award
process due to factors such as time spent repeating steps of the
process to resolve a company's formal protest, or because of
unanticipated complications that affected DOE's ability to adhere to
the planned schedule.
DOE Experienced Delays of Months to Years in Awarding Its Contracts:
For the 31 contracts we reviewed, most were awarded months to years
after the planned award date. To determine whether contract awards were
delayed, we compared the planned award date with the date DOE actually
made the award. None of the 24 competitive contracts we reviewed was
awarded according to DOE's planned schedule, and nearly all were
delayed by months or years. Only 1 of these competitive contract awards
was made within 1 month of the planned award date. The remaining awards
experienced more lengthy delays of from 2 months to over 2 years. In
contrast, delays were less prevalent among the noncompetitive contract
awards included in our sample. Six of these 7 contracts were awarded on
time or within 1 month of the planned award date. The other contract
was awarded 2 months late.[Footnote 4] (See fig. 1.)
Figure 1: DOE's Timeliness in Awarding 31 Contracts from Fiscal Years
2002 through 2005:
[See PDF for image]
Source: GAO analysis of DOE contract files.
[End of figure]
Noncompetitive contracts were awarded in a more timely manner, in part,
because the federal regulations for noncompetitive contract awards are
different and involve fewer steps. Thus, DOE officials could shorten or
eliminate parts of the process in which delays typically occurred on
the competitively awarded contracts we reviewed. For example, for a
noncompetitively awarded contract, DOE would not need to evaluate
multiple proposals because it had already identified a company with the
qualifications and experience necessary to perform the work. DOE
generally awarded the seven contracts we reviewed without competition
because of an urgent need to obtain the goods and services and to
ensure that the contractors could start work quickly. This is
consistent with one of the exceptions to the requirement for full and
open competition allowed by federal regulations. Nevertheless, since
federal regulations generally require that agencies use full and open
competition, the contracts awarded competitively better reflect the
timeliness of DOE's overall contract award process.
The schedules for the contract awards we reviewed showed that DOE
planned to take from about 1 month to up to 2 years to award its
contracts. Variation in the length of the planned schedule may depend
on several characteristics of the contract award process, such as
whether or not the contract was awarded competitively or
noncompetitively, the dollar value of the award, or the complexity of
the work. DOE officials indicated that facility management contracts
tend to be more complex and, therefore, can take longer and could be
more prone to delay, but we found some facility management contract
awards were less delayed than some smaller dollar value, more
straightforward contract awards. For example, the $4.8 billion facility
management contract to operate the Idaho National Laboratory took just
over 1 year to award and was delayed about 4 months, while a $5 million
administrative support services contract at the Savannah River site
took almost 2 years to award and was awarded 1-1/2 years later than the
planned award date.
Delays Occurred Because DOE Had to Modify Its Approach after Beginning
the Contract Award Process:
Delays in awarding contracts occurred when DOE modified its approach
after the start of the contract award process. DOE frequently had to
modify its approach to take corrective action in response to bid
protests, or because DOE took more time than planned to evaluate
proposals, hold discussions with companies that had submitted
proposals, or obtain headquarters approval for key documents.
Taking corrective action due to bid protests. One cause of delay for
DOE's contract awards was the time the department spent reworking
portions of the process in response to companies that filed bid
protests with GAO.[Footnote 5] Companies generally filed protests
because they believed that DOE had violated federal acquisition
regulations in carrying out the contract award process, most typically
in evaluating or soliciting proposals. Rework in response to a bid
protest was initiated in one of two ways: (1) GAO found fundamental
flaws in the contract award process, sustained the company's protest,
and recommended that DOE take corrective action or (2) DOE initiated
corrective action after conducting an assessment of the validity of the
company's protest, without waiting for a formal GAO decision. In either
case, rework can include canceling or revising the solicitation,
reevaluating proposals, or accepting proposals from firms that were
previously excluded from the competition.
Rework resulting from corrective action can significantly delay the
contract award. For the 31 contracts we reviewed, 10 resulted in bid
protests filed with GAO. Protests on 8 of these were denied or
dismissed by GAO, or withdrawn by the protestor.[Footnote 6] DOE agreed
to take corrective action on the remaining 2, once as a result of a
protest being sustained by GAO, and once before GAO issued a decision.
Delays due to such corrective action added up to 2 years to the
contract award process. For example, a contract worth $1.6 billion to
clean up the River Corridor area at DOE's Hanford, Washington, site was
delayed more than 1-1/2 years while DOE took corrective action in
response to a bid protest. GAO sustained a bid protest on the initial
award because DOE failed to properly apply its criteria for evaluating
the cost proposals. In response, DOE revised and reissued the
solicitation, evaluated new proposals, and selected a new contractor
about 2-1/2 years after the initial planned award date.[Footnote 7] In
another example, a NNSA contract award for administrative support
services was delayed almost 2 years when NNSA took corrective action in
response to a bid protest. Corrective action involved revising and
reissuing the solicitation. However, the NNSA evaluation board then had
difficulties completing cost evaluations of the revised proposals,
adding more time to the process, and finally awarded contracts to all
three companies almost 2 years later than the planned award date.
Evaluating proposals. DOE generally estimated between 1 and 6 months to
review and evaluate proposals for its competitive contract awards.
However, for the 24 competitively awarded contracts we reviewed, it
took on average 5 months longer than planned for this part of the
process, accounting for over half of the overall delay in carrying out
the process. For example, DOE was planning to award multiple contracts
to provide environmental remediation and deactivation of facilities
across the DOE complex. DOE estimated that it would receive about 20
proposals and allowed about 3 months for evaluating the proposals and
selecting the contractors. The department actually received more than
100 proposals and was delayed over 9 months, in part, due to the amount
of additional time required to review the larger than expected number
of proposals. In another example, the Savannah River Operations Office
allowed about 8 weeks to evaluate proposals for an administrative
support services contract at the site. However, the evaluation board
encountered several difficulties during the evaluation process,
including concerns about the wide range of the cost estimates in the
proposals. These concerns necessitated a more detailed cost evaluation,
resulting in the evaluation taking 5 months longer than
planned.[Footnote 8]
Holding discussions with companies submitting proposals. For eight of
the contracts we reviewed, DOE had to modify its approach to holding
discussions. In some cases, the planned schedule did not include any
time for discussions and, in other cases, the time DOE took to discuss
proposals with the companies submitting them exceeded the time
estimated in the plan. For these contracts, actual time to discuss
proposals exceeded the planned time by an average of 3 months. For
example, two contracts for conceptual design of a waste processing
facility at the Savannah River site were awarded 4 months late because
DOE initially intended to make the contract awards without discussions
and, therefore, did not plan time in the original schedule for this
part of the process. However, after the contracting process was under
way, the department decided it was necessary to conduct discussions on
the proposals because none of the companies had provided all of the
cost and pricing data necessary to fully evaluate the proposals.
Similarly, a contract for medical services for the Hanford site was
delayed more than 5 months, in part because the department held
discussions with companies concerning their cost proposals and
technical approach but did not plan for this activity in the schedule.
Obtaining headquarters approval of key documents. Awarding of DOE
contracts was also delayed due to obtaining headquarters approval of
key documents. In five contract awards we reviewed,[Footnote 9] delays
in obtaining the required review and approval from DOE headquarters
officials caused an average 5-month delay in contract award. For
example, for a contract to manage and operate DOE's Berkeley National
Laboratory, DOE allowed 1 month for headquarters review and approval of
the draft solicitation. However, headquarters review and approval took
5 months, partly due to the complexities of competing a contract that
had been in place for decades. As a result, the contract award was 4
months late. In another example, the Oak Ridge Operations Office
allowed 1 month for headquarters review and approval of a solicitation
for a contract for medical isotope production. However, headquarters
review and concurrence took about 1 year longer than anticipated
because of additional requests for information from the Congress on
DOE's strategy for going forward with the work under this contract.
Overall, the contract award was delayed nearly 2 years due to this
lengthy review and the need for extensive discussions during the
evaluation phase with companies that had submitted proposals.
It is unclear the extent to which these delays in awarding contracts
were avoidable. At times, delays in the process appeared to be outside
DOE's control and, therefore, more difficult to anticipate and manage,
such as difficulty obtaining funding or to address concerns raised by
the Congress or other stakeholders. For example, a $562 million
contract for facilities and services to stabilize the department's
depleted uranium hexafluoride inventory at Portsmouth and Paducah was
delayed after the Office of Management and Budget, late in the process,
raised concerns about the need to build facilities at both locations.
Dealing with this issue contributed to the delay of the contract
award.[Footnote 10] While external factors such as this can impact the
planned schedule, some delays are clearly avoidable, such as when DOE
had to take corrective action in response to bid protests because the
department failed to follow its contract award process. In such cases,
better management and oversight of the contract award process would
provide opportunities for improvement. According to the Director of
DOE's Office of Procurement and Assistance Management, DOE cannot plan
for all possible events when developing a schedule for a contract award
process and must respond to changing circumstances and incorporate
additional steps into the award process when necessary.
Delays in Awarding Contracts Could Increase Costs to the Government and
Industry and Affect Future Competition:
Delays in awarding contracts could increase costs both to DOE and the
companies that are competing for the potential contracts and could also
affect whether companies are willing to compete for DOE contracts in
the future. Specifically, awarding a contract months or years after the
date anticipated in the contract award schedule could increase the
overall costs to the government. DOE staff involved in a contract award
may include officials from the program offices, such as the Offices of
Environmental Management or Science; contracting and legal specialists;
and nuclear safety and regulatory experts. Both salary and travel costs
associated with keeping these integrated teams together for the
duration of the contract award process can be significant. However,
these costs cannot be readily quantified since the department does not
accumulate or track the costs associated with individual contract
awards. Nevertheless, DOE officials acknowledge that there may be
additional costs associated with contract awards that are delayed. The
added time and resources spent on delayed contract awards may impact
the department's ability to meet its management and oversight
responsibilities, including planning for and carrying out other
contract awards.
According to DOE officials, prolonged delays in awarding contracts
could also increase costs for companies that are submitting proposals.
Companies competing for DOE contracts invest considerable time and
resources in developing their proposals. However, since companies
generally consider their proposal costs to be proprietary information,
we could not quantify those costs. For DOE's contracts, once companies
submit proposals, DOE generally requires the companies to ensure that
key personnel identified in the proposals continue to be available
until the award decision has been made. If a contract award is delayed,
companies may have to keep key personnel available for months or even
years, which could increase their costs and/or represent a possible
lost opportunity to the companies since those key personnel may not be
available for other work. For example, our review of file documents
found that several small businesses competing for a contract to provide
infrastructure services at DOE's Paducah, Kentucky, site expressed
frustration over the costs of keeping key personnel available while DOE
took nearly 1 year after the planned award date to complete the process
and award the contract.
The length of time and increased costs to carry out a contract award
may also discourage some companies from competing for DOE work, thus
potentially affecting the extent of competition in the future. Ensuring
adequate competition for contracts can help obtain the best value for
the government. According to DOE officials who oversee the contracting
process, they have not seen a decline in the number of companies
willing to compete for DOE's contracts, but the officials agree that
this is a potential concern, and it has been a concern in the past. For
example, a January 2001 report that analyzed the contractor base for
DOE's environmental cleanup work stated that the number of companies
that were both willing and able to compete for major remediation
contracts had declined over the past several years.[Footnote 11] The
report concluded, among other things, that promoting competition among
a large number of qualified companies was crucial to getting the best
value for the government and accomplishing the environmental cleanup
mission. Therefore, anything that could reduce the pool of potential
companies competing for DOE's work, such as an inefficient contract
award process, would not be in the department's best interest of
fostering full and open competition for its work.
Efforts to Address the Causes of Delays Are in Early Stages, but
Concerns Remain about the Potential Effectiveness of DOE's Planned
Actions:
When we began our review in July 2005, DOE officials generally were not
addressing delays in awarding contracts because DOE's data was showing
that its contracts were being awarded in a timely manner. However,
since late 2005, DOE has been implementing three main efforts to
improve its contracting, partly in response to criticism by GAO and
others. These efforts include (1) an initiative to address the DOE
contracting weaknesses that led GAO to designate the area as high risk
for fraud, waste, abuse, or mismanagement; (2) a plan to restructure
DOE's Office of Environmental Management to focus more attention on the
contract award process; and (3) steps by NNSA and DOE's Office of
Procurement and Assistance Management to improve performance measures
on the timeliness of contract awards. While these improvement efforts
appear to be constructive and may also help to address delays in
awarding contracts, we have two remaining concerns related to the
timeliness of DOE's contract awards. First, the efforts do not reflect
a comprehensive approach within the department to improve the
timeliness of contract awards. Second, even if DOE uses improved
performance data to identify the causes of delays in awarding its
contracts, the department does not have a systematic method to develop
and disseminate best practices and lessons learned.
DOE Was Not Addressing Delays Because Incomplete Performance Data
Indicated Contracts Were Awarded in a Timely Manner:
When we began our work in July 2005, DOE officials generally were not
taking steps to address the causes of delays in awarding contracts. One
of the main reasons for this was that DOE's performance data was
generally showing its contracts were being awarded in a timely manner.
Although our analysis uncovered delays in most of the 31 contract
awards valued at $5 million or greater from fiscal years 2002 through
2005 that we reviewed, DOE's performance data for the same period
showed that most of its contract awards were timely. For example, the
data for fiscal years 2003 and 2004 showed that, respectively, 88 and
86 percent of the contract awards were timely. According to DOE's
performance measures, a timely award meant that DOE had awarded the
contracts within 150 days after receiving proposals from companies. An
official from the Office of Procurement and Assistance Management who
manages the performance data said that the department used 150 days as
a timeliness standard because it represented a realistic yet
challenging time frame for awarding the contracts.[Footnote 12]
However, DOE's performance data did not provide a complete picture of
the department's timeliness in awarding its contracts for two reasons.
First, the data for those years did not include all of the contract
award process. Instead, the performance data DOE used measured only the
timeliness in carrying out the final stage of the process (the
evaluation phase), from the point at which DOE received the proposals
through contract award. Consequently, the performance data excluded the
earlier steps of the process, from planning the contract award through
the process of soliciting proposals from interested companies. For the
24 competitively awarded contracts valued at $5 million or greater we
reviewed, the excluded steps accounted for over half of the total time
that DOE typically spent awarding its contracts. As a result, some of
DOE's contract awards may appear timely, when, in fact, DOE awarded the
contracts weeks or months after the planned award date. For example, in
fiscal year 2003, DOE awarded a contract for laundry services at the
Hanford site in Washington about 2 months after its planned award date.
However, DOE considered the contract award to have been timely because
the department was able to award the contract within 150 days of
receiving proposals.
Officials from the Office of Procurement and Assistance Management said
DOE's timeliness data are intended to measure the performance of
contracting staff. Therefore, the officials said that the timeliness
measure includes only the evaluation phase of the contract award
process because that is the aspect of the process that would more
likely be under the direct control of the contracting staff. Prior to
the evaluation phase, officials said that contracting staff generally
rely on program staff to develop key information, such as a description
of the work to be carried out under the contract. Furthermore,
according to DOE's guidance, program office staff are generally
responsible for planning the contract award process. However, we found
that DOE's contracting staff were generally involved throughout the
entire contract award process as part of an integrated team approach.
Furthermore, it is unclear to what extent contracting staff have direct
control over any phase of the process.
Second, DOE's performance data were incomplete because data on DOE's
facility management contracts were excluded. For example, in fiscal
year 2005, DOE competitively awarded seven facility management
contracts valued at a total of about $10.4 billion. However, DOE
excluded the data on these facility management contracts from its
performance measures for timeliness. DOE officials from the Office of
Procurement and Assistance Management said they excluded the facility
management contracts from the department's performance data because
those contracts are particularly complicated to award. Unlike the
contracts included in the performance measures for timeliness, the
department could not determine an appropriate timeliness standard for
the facility management contracts. As a result of excluding the
facility management contracts, the performance data for fiscal year
2005 did not reflect the department's timeliness in awarding about 97
percent of the nearly $11 billion in contracts that the department
awarded that year.
In contrast to DOE's approach, we measured the department's timeliness
in awarding its contracts by comparing the planned award dates with the
dates DOE actually awarded the contracts. We used the planned award
date as the standard for determining whether contracts were awarded in
a timely manner, rather than comparing the time it took DOE to award
the contract after proposals were received with a fixed standard, such
as 150 days. A fixed standard is arbitrary because the actual time
needed to carry out a contract award process can differ greatly for
legitimate reasons, depending on the circumstances of each individual
contract award. Furthermore, in doing so, we included the facility
management contracts because those contracts can represent a
significant portion of the total value of DOE's contract awards.
DOE Recently Began Three Main Efforts to Improve Its Process for
Awarding Contracts:
Since late 2005, DOE has initiated three new efforts to improve its
contracting processes. DOE is implementing these actions as part of its
continuing efforts to improve its contracting processes and, in part,
because of long-standing criticisms by GAO and others. Since 1990, GAO
has designated DOE's contract management, including project management,
as an area at high risk for fraud, waste, abuse, and mismanagement. Our
reviews have uncovered weaknesses in DOE's management and oversight of
its contracts which, in some cases, have undermined DOE's ability to
carry out its missions or dramatically increased its costs.[Footnote
13] More recently, criticisms have included the frequency of delays in
awarding contracts and the need for reforms. For example, in
congressional testimony in November 2005 and March 2006, the Assistant
Secretary for Environmental Management cited the need for improvements
in the department's contract award practices. Furthermore, conferences
on DOE environmental cleanup issues held in February and October 2005
and attended by DOE and contractor officials included presentations
calling for a reevaluation of DOE's contract award process.
DOE's recent efforts to improve its contracting include the following:
* Initiative to address DOE's high-risk contracting practices. In
November 2005, DOE drafted a plan aimed at improving the department's
contract and project management, including management of the contract
award process. DOE developed the plan in response to an effort by the
Office of Management and Budget that requires agencies to address areas
identified by GAO as high risk for fraud, waste, abuse, or
mismanagement. Actions included in the plan to improve the contract
award process include conducting better oversight of the planning
process, maximizing competition for contracts, and ensuring that
contracts allow DOE to properly hold contractors accountable for their
performance. To date, DOE has developed performance measures and
targets for the focus areas in its action plan, as well as target dates
for implementing the plan. As part of this initiative, in February
2006, DOE began to increase the frequency of training for new
evaluation boards and selection officials and to provide this training
at the beginning of the planning process. Although this plan does not
specifically address the timeliness of contract awards, the overall
effort to improve contracting and project management could help
identify and address underlying causes for delays in awarding
contracts.
* Initiative to restructure DOE's Office of Environmental Management.
Also in late 2005, the Assistant Secretary for Environmental Management
announced plans to restructure the headquarters-based administrative
functions within his program office. According to officials in the
Office of Environmental Management, the reorganization is aimed, in
part, at improving contract and project management by bringing these
functions together under a new Deputy Assistant Secretary for
Acquisition and Project Management. As the reorganization is
implemented, the Office of Environmental Management, at the request of
a congressional subcommittee, has also commissioned the National
Academy of Public Administration to undertake a general management
review of the program, including reviewing the program office's
policies and processes for awarding contracts and providing advice on
improving their effectiveness. As the study progresses, DOE will
receive interim reports and recommendations on how to implement the
reorganization and increase its effectiveness, which may also result in
improving the timeliness of contract awards.
* Initiative to improve performance data on contract timeliness. NNSA
and DOE are implementing separate efforts to help them track contract
awards against the planned dates for carrying out the process. NNSA's
effort is focused on a recently implemented data system that will help
its contracting staff track ongoing contract awards against a detailed
schedule of milestones. The requirement to input a detailed milestone
schedule at the beginning of the contract award process applies to all
of NNSA's contracts, regardless of their dollar value. As staff carry
out the process, the system will record the dates on which key steps
were completed and document any delays from the schedule. The system
also allows the contracting officials to generate reports on the status
of ongoing contract awards, as well as analyze data on existing
contract awards for evidence of systemic delays or other problems. As
of April 2006, the data system was operational, and NNSA contracting
officials have started using this milestone information to manage
ongoing contract awards.
Similarly, in March 2006, DOE's Office of Procurement and Assistance
Management began implementing plans to track the timeliness of DOE's
facility management or other high-visibility contracts against a
detailed milestone schedule. According to the Director of the Office of
Procurement and Assistance Management, representatives from his office,
as well as other department officials responsible for awarding facility
management contracts, will work to develop a realistic, but
challenging, milestone schedule for carrying out the award process.
According to the Director, revised DOE guidance will recommend that
planning for a new facility management contract should begin no later
than 2 years prior to the expiration of an existing contract. Once the
milestone schedule has been established, his office will then track the
contract award process to compare planned and actual key dates and
provide monthly updates to the Deputy Secretary. As of April 2006, DOE
had established schedules for the current and upcoming facility
management contract awards, began monitoring the progress against those
schedules, and began submitting monthly status reports to the Deputy
Secretary.
DOE's efforts to improve its contracting are generally in the early
stages of being planned or implemented, and not all of the efforts
specifically address the timeliness of contract awards. Nevertheless,
we believe these initiatives are a constructive step towards addressing
long-standing weaknesses in the department's contracting and improving
its contract awards. As the department addresses the weaknesses and
takes steps to improve its contracting, improved efficiency and
effectiveness could also result in fewer delays in awarding contracts.
However, as discussed below, we are concerned that the efforts may fall
short in two main respects, which could limit the department's
effectiveness in improving the timeliness of contract awards.
Lack of a Comprehensive Approach to Improvement Efforts and
Inconsistent Practices for Communicating Lessons Learned May Limit the
Effectiveness of DOE's Efforts:
Standards for a well-functioning contract award process come from
federal acquisition regulations and GAO's framework for assessing the
process at federal agencies. The framework integrates the views of
federal government and industry experts on the characteristics and
practices of a well-functioning contract award and management process,
and it draws upon decades of experience within GAO in analyzing
contracts and contracting organizations.[Footnote 14] Among the
standards for a well-functioning contract award process set forth by
the framework and regulations are that federal agencies should use
knowledge from prior contract awards to assess the effectiveness of the
contracting process and, in the interest of continuous improvement,
have a systematic means for instituting best practices and lessons
learned. DOE's improvement initiatives, as they apply to the timeliness
of contract awards, appear to fall short in both respects.
First, DOE has not ensured that the efforts to develop better data on
the timeliness of contract awards will include all of the department's
contract awards that require a written plan and schedule. While DOE and
NNSA's efforts to develop better timeliness data will include all of
the department's facility management contracts, as well as NNSA's other
contract awards, the rest of DOE's contracts may not be included. This
could be a considerable portion of DOE's contracts valued at $5 million
or greater. For example, of the contracts that the department awarded
in fiscal years 2002 through 2005, nearly one-quarter of the total
contract value, or $3.9 billion, may not have been included in DOE's
improvement efforts. These contracts may be excluded because they were
neither facility management contracts, other DOE high-visibility
contracts, nor contracts awarded by NNSA. The Director of DOE's Office
of Procurement and Assistance Management said that the tracking against
milestone schedules includes only contracts that represent significant
risk or are critical to carrying out DOE's programs or missions. For
example, the contracts that are currently being tracked include
facility management contracts, other large cleanup contracts, and
contracts that may also be of particular interest to headquarters, such
as those for guard services. The Director added that it is not the
intent of this effort to monitor the progress of all ongoing contract
awards of $5 million or greater, and that he would expect contracting
officers in the field locations to be accountable for contracts within
their approval authority. Nevertheless, we believe that efforts to
develop better timeliness data should include all contracts valued at
$5 million or greater because DOE guidance generally requires written
plans and schedules for these contracts.
Second, the department has neither had a systematic approach for
instituting best practices or lessons learned in its contract award
process, nor is it clear that the department's efforts will result in a
more systematic approach in the future. As DOE develops better data on
the timeliness of its contract awards and analyzes the data to identify
and address systemic problems or underlying causes of delays, the
department will be developing useful information that could help ensure
that future contract awards benefit from the best practices or lessons
learned. Moreover, federal regulations require agencies to have a
process for ensuring that lessons learned are developed and used in
planning future contract awards.[Footnote 15]
Based on federal regulations and GAO's framework, standards for a well-
functioning contract award process would include a systematic approach
for identifying and communicating lessons learned and best practices.
Such an approach would include activities such as routinely evaluating
performance data across a broad range of contracts to identify the
extent to which the contract award process went well or encountered
problems. In doing so, DOE would then look for trends or systemic
problems and investigate the underlying causes. A systematic approach
would also include a mechanism to ensure this information is readily
available, in order to help officials who plan and carry out contract
awards do so more efficiently.
We did find some examples in which best practices and lessons learned
were identified and in some cases shared within the department, but we
did not find a systematic approach for doing so. For example, in a
recent DOE evaluation of the problems that occurred in awarding
contracts for environmental cleanup and infrastructure services at its
facilities in Portsmouth, Ohio, and Paducah, Kentucky, DOE's review
confirmed that poor planning and management of the process caused
delays of 6 months to 1 year in awarding the contracts. Some of the
factors mentioned were lack of timely management direction in key
areas, a lengthy headquarters review and approval process, and
unrealistic schedules for the awards. However, DOE concluded that the
factors leading to the delays were not typical for DOE's contracts and
did not represent a systemic problem. Therefore, DOE did not
communicate the information as a systemic problem. In contrast, our
analysis of 31 contracts valued at $5 million or greater indicated that
these types of causes for delays were commonplace.
In addition, best practices or lessons learned have been communicated
at training sessions and presentations to staff carrying out contract
awards, such as those offered by DOE's Office of General Counsel.
According to the DOE attorney who has led a number of them, the
sessions are generally aimed at helping staff carry out the contract
award process effectively and in accordance with federal regulations
and DOE guidance. This may increase the department's ability to avoid
successful bid protests. Best practices or lessons learned have also
been shared at annual procurement directors' conferences held for
officials who oversee the contract award process, with the most recent
conference in October 2005 covering topics such as proper documentation
of decisions made during the contract award process.
However, several DOE officials that were responsible for contract
awards said that these best practices or lessons learned were not
consistently available or may have come too late in the planning for
the contract award to be very beneficial. The officials added that
there was no centralized source within DOE for best practices, but they
could obtain lessons learned by contacting others within the department
who had recently awarded contracts. For example, an official from the
Office of Environmental Management said that, in planning the contract
award process for DOE's Savannah River site near Aiken, South Carolina,
she traveled to DOE's offices in Idaho Falls to meet with officials
there who had just awarded contracts for environmental cleanup at the
site, and management and operation of the Idaho National Laboratory.
While she said the meetings were beneficial and she obtained lessons
learned documents, she saw this process as the only way to obtain best
practices or lessons learned from those contract awards. As another
example, this same DOE official conducted a recent contract award
process, and said she would have benefited from early training on how
to properly document decisions made while evaluating the proposals that
were submitted. She added that the training was not made readily
available, and it was not mandatory. After submitting draft documents
for headquarters review, she eventually received helpful information on
how to improve the documentation, but this would have been more
beneficial earlier in the process.
Conclusions:
DOE relies on contractors to carry out its environmental cleanup,
scientific research, nuclear weapons management, and other missions
vital to national health, safety, and security. Our analysis of the
contracts we reviewed showed that DOE experienced delays in awarding
many of these contracts to carry out its critical missions. It is
unclear the extent to which these delays may have been avoidable with
better oversight or management, but at least some of the delays were
avoidable, such as when DOE had to rework parts of the contract award
process to correct errors. While DOE eventually awarded these
contracts, a contract award process that takes too long runs the risk
of undermining the department's efforts to obtain needed goods or
services at the best value for the government. As DOE goes forward with
its efforts to improve its contract award process, it will be important
to ensure that performance measures address the timeliness of all of
the department's contract awards that require written plans and
schedules, and that lessons learned and best practices are consistently
shared with DOE staff that will plan for and carry out future contract
awards. Improving the department's performance in awarding contracts is
an important part of ensuring that DOE's contracts provide the best
value to the government.
Recommendations for Executive Action:
To help ensure that DOE's contract award process for contracts that
require a written plan and schedule is efficient and effective and that
DOE is obtaining the best value for the government, we recommend that
the Secretary of Energy take the following two actions:
* Ensure that performance measures for the timeliness of the
department's contract awards include the entire contract award process
from planning to contract award and include all of the department's
contracts that require a written plan and schedule.
* Establish a more systematic way of identifying lessons learned from
past and current contract awards and sharing those lessons and best
practices with the staff involved in planning and managing the
department's efforts to award its contracts.
Agency Comments and Our Evaluation:
We provided a draft of the report to DOE for review and comment. In
written comments, the Director of the Office of Management generally
agreed with our recommendations, but questioned whether we intended the
recommendations to apply to all of the department's contracts. We
modified the wording to clarify that our recommendations apply only to
those contracts that require a written plan and schedule. In addition,
DOE raised concerns about our nonprobability sample, our
characterization of contract awards as delayed, and our view that DOE's
existing performance measures were incomplete.
Regarding our sampling methodology, DOE said that the results of our
nonprobability sample should not be used to reach overall conclusions
about DOE's contracting practices because the 31 contracts we reviewed
represented less than 1 percent of the 5,000 contracts DOE awarded
during fiscal years 2002 through 2005 and were not representative of
the entire group of contracts. However, we believe DOE has
mischaracterized our scope and methodology. First, we did not derive
the sample of 31 contracts from the 5,000 total contracts that DOE
awarded during the period. Instead, we focused our efforts on the 131
contracts awarded by DOE that were valued at $5 million or greater
because such contracts generally required a written plan, including
estimated dates. The 31 contracts we reviewed represented about 73
percent of the total dollar value of those 131 contract awards valued
at $5 million or greater during the period and about 24 percent of the
total number of these larger contract awards. Furthermore, our report
clearly states that the results of a nonprobability sample cannot be
used to make inferences about a population, and we did not draw
conclusions about DOE's overall contracting processes based on the
sample results.
DOE also took exception to our characterization of contract awards as
delayed and our use of the department's originally planned award date
as an indication of timeliness. DOE said that the milestone schedule
developed in the written plan is an internal planning tool that may
change over time, and the department cannot factor in a schedule
contingency for every possible event. However, as we reported, federal
regulations state that the purpose of planning the contract award
process is to ensure that the government obtains the needed goods and
services in the most effective, economical, and timely manner. The
regulations stress the importance of timeliness in awarding contracts
and require that written plans for carrying out the contract award
process include milestones for completing the steps in the process.
Adherence to the milestones established in the written plan provides a
consistent measure of timeliness and is one indicator of how well the
contract award process is being managed. In addition, our report
clearly states that some of the contracts DOE awarded later than
planned were subject to external events and complications beyond DOE's
immediate control and recognizes that DOE's milestone schedule cannot
anticipate all possible events. Even so, we continue to believe that
better management and oversight of the contract award process,
including tracking actual against planned dates in the milestone
schedule, could have prevented lengthy delays in awarding some of the
contracts we reviewed.
In an attachment to its letter, DOE also disagreed with our conclusions
that the department's performance measures for timeliness in awarding
contracts were incomplete and, as a result, the department was not
addressing delays in awarding contracts. As we reported, DOE has stated
that its timeliness measures were intended to evaluate the performance
of contracting staff and thus included only the parts of the contract
award process under their direct control. DOE also said the department
had been addressing delays in awarding contracts through its lessons
learned process. We continue to believe that DOE's performance measures
for timeliness in awarding contracts could be improved by being more
comprehensive. DOE's performance measures included only the evaluation
phase of the contract award process and excluded the facility
management contracts, which represent a significant percentage of DOE's
overall contracting dollars. We also believe that DOE was generally not
addressing these delays before our review began. The three initiatives
DOE started in late 2005--to address GAO's high-risk designation for
DOE's contract management, to restructure the Office of Environmental
Management, and to improve performance data on contract timeliness--
were the main efforts the department identified as steps to address
delays in awarding contracts.
DOE also provided technical comments in an attachment to the letter,
which we have incorporated and summarized as appropriate. DOE's
comments on our draft report are included in appendix II.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies of this report
to the Secretary of Energy. We will also make copies available to
others on request. In addition, the report will be available at no
charge on the GAO Web site at [Hyperlink, http://www.gao.gov].
If you or your staff have any questions on this report, please contact
me at (202) 512-3841 or aloisee@gao.gov. Contact points for our Offices
of Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this
report are listed in appendix III.
Sincerely yours,
Signed by:
Gene Aloise:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Scope and Methodology:
In response to a congressional request, we determined (1) the extent to
which the Department of Energy (DOE) adhered to its planned dates for
awarding contracts and the factors contributing to any delays, (2) the
impacts of any delays in awarding contracts, and (3) the extent to
which DOE has taken steps to address delays in its contract award
process. To conduct our work, we analyzed contracts valued at $5
million or greater from multiple DOE locations and interviewed
contracting and program officials at DOE headquarters and field
locations. We also reviewed federal laws and regulations on
contracting, agency policies and guidance, GAO guidance on bid
protests, and standards for assessing DOE's management and oversight of
its contract award process.
To determine the extent to which DOE adhered to its planned dates for
awarding contracts, we analyzed 31 contracts from seven DOE locations
that (1) were affiliated with the department's three largest component
organizations--the Office of Environmental Management, Office of
Science, and the National Nuclear Security Administration--and (2) had
awarded a large share of the department's contracts valued at $5
million or greater in fiscal years 2002 through 2005, including
facility management contracts.[Footnote 16] We focused on the three
largest component organizations because they comprised over 80 percent
of DOE's annual budget and because they were affiliated with about two-
thirds of the locations departmentwide that had awarded contracts in
the four fiscal years we reviewed. We considered the four most recent
fiscal years, 2002 through 2005, in the scope of our study to help
ensure that the results reflected DOE's recent activity, while
increasing the number of contracts that could potentially be selected
for analysis.
In fiscal years 2002 through 2005, the department awarded over 130
contracts valued at $5 million or greater, for a total value of about
$16.3 billion. From seven DOE locations, we selected a nonprobability
sample of 31 of these contracts, accounting for about $11.9 billion, or
73 percent, of the $16.3 billion (see table 1).[Footnote 17] Contracts
in our sample ranged in value from about $5.5 million to $4.8 billion,
and they included 7 of the 8 facility management contracts that the
department competitively awarded during the four fiscal years we
studied.[Footnote 18] In selecting our sample, we analyzed DOE contract
award data to identify locations that had awarded a large share of the
department's contracts in fiscal years 2002 through 2005. To verify the
completeness and accuracy of contract award data, we interviewed
knowledgeable DOE officials at the locations we visited (six of the
seven field locations from which we selected contracts). On the basis
of our checks, we determined that these data were sufficiently reliable
for identifying DOE locations with a large share of contracts.
Table 1: Value of DOE Contracts Selected in the Nonprobability Sample,
by Location:
Location providing contract information: Albuquerque Service Center, N.
Mex;
Affiliation: NNSA;
Value of contracts, $5 million or greater: $282,094,471;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 1.7.
Location providing contract information: Chicago Service Center, Ill;
Affiliation: Science;
Value of contracts, $5 million or greater: 826,878,347;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 5.1.
Location providing contract information: Idaho Operations Office,
Idaho;
Affiliation: EM and Nuclear Energy;
Value of contracts, $5 million or greater: 7,798,881,546;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 48.0.
Location providing contract information: Oak Ridge Operations Office,
Tenn;
Affiliation: EM, NNSA, Science;
Value of contracts, $5 million or greater: 121,239,623;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 0.7.
Location providing contract information: Portsmouth & Paducah Project
Office, Lexington, Ky;
Affiliation: EM;
Value of contracts, $5 million or greater: 792,227,652;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 4.9.
Location providing contract information: Richland Operations Office,
Wash;
Affiliation: EM;
Value of contracts, $5 million or greater: 1,606,499,515;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 9.9.
Location providing contract information: Savannah River Operations
Office, S.C;
Affiliation: EM and NNSA;
Value of contracts, $5 million or greater: 460,033,679;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 2.8.
Location providing contract information: Total for contracts selected
in the nonprobability sample;
Value of contracts, $5 million or greater: $11,887,854,833;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 73.1.
Location providing contract information: Total for contracts not
selected in the nonprobability sample;
Value of contracts, $5 million or greater: $4,371,971,440;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 26.9.
Location providing contract information: Total for all of the
department's contracts;
Value of contracts, $5 million or greater: $16,259,826,273;
Value of contracts, as a percentage of the total value for all of the
department's contracts, $5 million or greater: 100.0.
Source: GAO analysis of DOE data.
Notes: Affiliation refers to the department's component organizations-
-such as the Office of Environmental Management (EM), the Office of
Science, or the National Nuclear Security Administration (NNSA)--
overseeing work at the locations we contacted.
Contracting data in the table reflects contracts that were awarded in
fiscal years 2002 through 2005 through a competitive or noncompetitive
process. It does not include contracts awarded prior to fiscal year
2002 that the department took action to renew or extend in fiscal years
2002 through 2005, beyond the initial period of performance, because
extending an existing contract eliminates the opportunity for such a
process to occur.
[End of table]
To determine whether DOE adhered to its planned dates for awarding the
contracts in our nonprobability sample, we used contract file
documents, obtained from the seven locations, to identify and then
compare the planned and actual contract award dates. We considered
contracts to be delayed if the actual award date was later than the
planned award date. In most cases, we identified the planned award date
in DOE's schedule for completing key steps of the contract award
process that DOE included in its formal written plan for awarding the
contract. Because DOE guidance generally requires a plan and schedule
when awarding contracts valued at $5 million or greater, the schedules
in the written plan generally provided a consistent source for the
planned award date. However, for 9 of the 31 contracts in our sample,
we had to obtain the planned award date from another source because the
associated plan and/or schedule was missing from the contract file. In
these cases, we obtained the planned award date from references in
other required file documents, such as the document used to justify
noncompetitive awards or presentations by officials involved in
awarding the contract. Similarly, for nearly all of the 31 contracts in
our sample, we identified the actual award date from the award date
written on the signed contract.[Footnote 19] However, for 2 of the 31
contracts, the signed contract was not available in the contract file,
and we instead obtained the award date from the data system DOE uses to
track its contract awards.
In addition to determining whether the 31 contracts in our
nonprobability sample were awarded by the planned date, we used
contract file documents to calculate how long it took DOE to make the
awards. We did so by calculating the elapsed time from the date DOE
initiated the contract award process to the date it awarded the
contract. For 23 contracts, we used the date of the formal written plan
for carrying out the contract award process as the date DOE initiated
the process.[Footnote 20] Although some planning steps typically
preceded the preparation of the written plan, documentation of the
steps was generally not consistently available in the contract files we
reviewed. In contrast, the formal written plan was a required and more
consistently available source. However, for 8 of the 31 contracts in
our sample, we had to obtain the initiation date of the contract award
process from a source other than the date of the written plan because
the plan was undated or missing from the contract file. In these cases,
we used contract file documents prepared during the early steps of the
contract award process, such as correspondence from DOE officials
approving the start of the process.
Furthermore, we identified some of the reasons for delays DOE
experienced in awarding contracts in our sample, in part, by contacting
DOE officials involved in awarding the contract. We also reviewed
contract file documents, such as meeting records and the descriptions
of the contract award process included in key documents generated
during the contract award process. When contract file documents were
used to determine the causes of delays, two analysts involved in this
study independently reviewed the documents to verify that the causes
were reasonably identified.
To further identify causes for delays, we analyzed documentation from
bid protests filed with GAO in fiscal years 2002 through 2005, in
addition to the bid protest guidance issued by GAO's Office of General
Counsel. We analyzed this documentation because it could potentially
describe problems encountered by DOE during the contract award process.
In correcting any problems, DOE may have repeated steps in the process,
eventually delaying the contract award. When bid protest documents were
used to determine whether (1) the contract award being protested was
also in our sample of contracts that we analyzed for delays or (2)
corrective action was agreed to by DOE or recommended by GAO as a
result of the protest, two analysts involved in this study
independently reviewed the documents to verify that the causes were
reasonably identified.
To determine overall impacts of any delays in awarding DOE's contracts,
as well as the extent to which the department has taken steps to
address the delays, we interviewed headquarters contracting officials
from the Office of Procurement and Assistance Management, as well as
contracting and program officials from the department's three largest
DOE component organizations, and officials from the Office of
Engineering and Construction Management, who oversee planning and
management of capital projects. Also, we interviewed contracting and
program officials at six of the seven field locations from which we
selected contracts for our nonprobability sample as follows:[Footnote
21]
* Albuquerque Service Center (NNSA), New Mexico;
* Idaho Operations Office (EM and Nuclear Energy), Idaho;
* Oak Ridge Operations Office (EM, Science, NNSA), Tennessee;
* Portsmouth and Paducah Project Office (EM), Lexington, Kentucky;
* Richland Operations Office (EM), Washington; and:
* Savannah River Operations Office (EM and NNSA), South Carolina.
Furthermore, for contracts in our sample, we analyzed file documents
for evidence of adverse impacts upon companies competing for the work
resulting from any delays in carrying out the contract award process.
We examined transcripts from some debriefing sessions that DOE held
with companies after awarding the contract, as well as other documents,
such as correspondence from companies or their representatives. To
further understand the impacts of delays, we also examined documents
related to DOE's contract award for environmental cleanup of its
Paducah, Kentucky, site, even though this contract was not part of our
sample. DOE's Office of Procurement and Assistance Management provided
us with its analysis of lessons learned and the factors that delayed
this contract award. We reviewed the contract file documents to better
understand the context of this analysis. However, we excluded the
contract from our sample because DOE awarded it in fiscal year 2006
and, therefore, it did not fit our selection criteria. As a result, we
did not include the contract in calculations or figures showing the
extent of delays in awarding DOE contracts.
In addition, we reviewed federal and DOE regulations that govern
contracting, DOE policy and guidance on contracting, and documents on
the department's assessment of its performance in carrying out its
contract awards. We also reviewed GAO's Framework for Assessing the
Acquisition Function at Federal Agencies for determining the
effectiveness of DOE's management and oversight of the contract award
process.
We conducted our work from July 2005 to June 2006 in accordance with
generally accepted government auditing standards.
[End of section]
Appendix II: Comments from the Department of Energy:
Department of Energy:
Washington, DC 20585:
Jun 23 2006:
Mr. Gene Aloise:
Director, Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Aloise:
We have reviewed the draft Government Accountability Office (GAO)
report entitled "DOE Contracting --Better Performance Measures and
Management Needed to Address Delays in Awarding Contracts" (GAO-06-
722). We appreciate that the report recognizes the Department of
Energy's (DOE) improvements in areas related to improving contract and
project management.
The draft GAO report specifically recognizes improvements in DOE's
management of contracts. For example, it notes: (1) an initiative with
the Office of Management and Budget to address the GAO's identification
of DOE's contract management as a "high risk" area; (2) a restructuring
of DOE's Office of Environmental Management to increase the focus on
planning and management of contract awards; and (3) specific steps by
the National Nuclear Security Administration's and DOE's Office of
Procurement and Assistance Management to implement improved measures of
the timeliness of the contract award process. One of the Department's
recent improvements is tailored source evaluation board training that
includes the latest guidance, policy and lessons-learned for the
conduct of the Department's major competitive procurements.
The draft GAO report states that the GAO analyzed contracts "from a non-
probability sample of contracts valued at $5 million or greater, that
DOE awarded during fiscal years 2002 through 2005." The draft report
acknowledges that a non-probability sample is one from which no
inference can be made from the sample to the general population (DOE
contracting). However, the report then draws conclusions from this
sample regarding the timeliness of the Department's procurements and
the factors contributing to a perceived lack of timeliness.
Additionally, the GAO reviewed only 31 contracts out of over 5,000
contract awards for the period of fiscal years 2002 through 2005. This
represents less than 0.62% of the Department's procurement awards.
Considering the fact that (1) the sample contained a number of
contracts which did not meet projected award dates because of factors
well beyond the control of the Department, (2) the sample size was
insignificant, and (3) accurate inferences from a non-probability
sample are not possible, DOE believes that the draft report's
conclusions, about the health of the Department's contracting based on
this sample, are unsupported.
The draft report characterizes certain of the Department's procurements
inappropriately as "delayed" and overly focuses on schedule timelines
rather than on the resulting quality of the procurements. The
Department believes that the GAO's use of the originally planned award
date to determine timeliness does not, in and of itself, provide a
meaningful measure of timeliness because it does not consider the
external forces on the procurement, and the assumptions and conditions
which changed over time. Lack of compliance with a procurement's
originally planned timelines is not necessarily an indicator of a
poorly run procurement. The original schedule is a internal planning
tool which may change over time as conditions and reality change.
The GAO's characterization that DOE is remiss because certain of its
contracts were not awarded by the originally projected award dates is
not accurate. Those originally planned award dates were reasonable
projections based on the best information and assumptions at the time
but did not include all possible contingencies which might affect the
eventual award date. A number of the contract awards characterized by
the GAO as "delayed" occurred after the projected award date because of
circumstances beyond the direct control of the Department. Such
circumstances were Congressional intervention, redirection by the
Office of Management and Budget, the necessity to conduct discussions
with offerors, protests, changes in requirements, lack of funding,
changing site conditions, significantly higher number of proposals than
could be reasonably expected, etc.
For instance, the report suggests that the Department erred by not
including discussions in the planned schedule or in taking longer to
hold discussions than anticipated in its planning documents. The
Department, as do other Federal agencies, frequently reserves the right
to award a competition without discussions if the situation permits
consistent with Federal regulations and GAO case law. FAR 15.306(d)(2)
states that "The primary objective of discussions is to maximize the
Government's ability to obtain best value, based on the requirement and
the evaluation factors set forth in the solicitation." Often, it is
impossible to determine if discussions will be required or the extent
of the discussions until the proposals are evaluated. If the
competitive situation provides that discussions are not required, i.e.,
the Department has determined that it can obtain the best value without
discussions, then discussions will not be held. However, it is
frequently impossible to determine at the planning stage of a
procurement if it will be necessary to hold discussions.
DOE believes that rigorous, but realistic, acquisition schedules best
serve the program mission needs and are the most effective tool to
manage the acquisition cycle. Including contingencies for all possible
procurement activities would result in a less disciplined approach in
meeting acquisition objectives. The unintended consequence of GAO's
conclusions would be overly protracted and less rigorous schedules.
The report provides two recommendations to the Secretary of Energy to
help ensure that the Department's contract award process is efficient
and effective and that DOE obtains the best value for the Government
to: (1) ensure that performance measures for the timeliness of the
Department's contract awards include the entire contract award process
from planning to contract award and include all of the Department's
contracts; and (2) establish a more systematic way of identifying
lessons learned from past and current contract awards and sharing those
lessons and best practices with the staff involved in planning and
managing the Department's efforts to award its contracts.
Because of the importance of the subject matter, the beneficial nature
of the GAO's suggestions, and the Department's commitment to continuous
improvement in this area, DOE generally agrees with the draft report's
recommendations. The Department concurs with the report's
recommendations with the following comments:
1. GAO Recommendation: Ensure that performance measures for the
timeliness of the department's contract awards include the entire
contract award process from planning to contract award and include all
of the department's contracts.
DOE Comment: The Department already measures timeliness on the
significant majority of its contracts for those aspects of the award
process over which acquisition officials have substantial control.
Furthermore, the Department measures timeliness from planning through
award for those major contracts which, because of dollar amount,
complexity or visibility, merit closer scrutiny. Nonetheless, the DOE
will:
a. continue to track and monitor its management and operating and other
critical contracts from planning through award in order to identify
challenges under these procurements wherever possible;
b. review DOE's Balanced Scorecard (BSC) to determine if it would be
appropriate to: (1) expand the Procurement Action Lead Time (PALT)
measure to include earlier stages in the procurement cycle, and (2)
extend the BSC PALT measure to compass a greater population of the
Department's contracts; and:
c. review and benchmark other agencies' PALT measures for possible
application to DOE.
The Department is not aware of any Federal agencies that measure and
track the timeliness of the "entire contract award process" (from
planning through award) for 100% of its contracts. The Department would
greatly appreciate it if the GAO would advise DOE of such an agency so
that the Department can review and evaluate that agency's approach.
2. GAO Recommendation: Establish a more systematic way of identifying
lessons learned from past and current contract awards and sharing those
lessons and best practices with the staff involved in planning and
managing the department's efforts to award its contracts.
DOE Comment: The Department continuously identifies lessons-learned and
shares them with DOE staff. Such lessons-learned and best practices are
regularly disseminated in the form of Procurement Directors
teleconferences, Procurement Policy Advisory Group meetings, various
training sessions, the DOE Acquisition Guide, DOE Acquisition Letters,
the DOE Professionals Homepage, procurement action reviews and myriad
other forums. Recent on-going Source Evaluation Board training
conducted in the field provided procurement and technical staff with
current policy, the latest guidance and lessons-learned from analysis
of past DOE competitive procurements. Although the Department believes
that it has aggressively communicated lessons-learned as they have been
identified, DOE will:
a. continue reporting to senior management on the status of the
Department's major procurements,
b. continue training source evaluation boards on the proper conduct of
competitive procurements,
c. examine opportunities internally to better identify and disseminate
lessons-learned and best practices, and:
d. benchmark other agencies to ascertain better ways to identify and
disseminate lessons-learned and best practices.
Additional comments and corrections on the draft report are attached
for your consideration. The Department appreciates the GAO's
recommendations and will consider them in our future improvement
efforts. The Department requests that its full comments including the
enclosure be included in the GAO's final report.
Sincerely,
Signed by:
Ingrid Kolb:
Director:
Office of Management:
Enclosure:
cc:
A. Scott Geary, Contract Administration Division:
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Gene Aloise (202) 512-3841 or aloisee@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Bill Swick, Assistant
Director; Carole Blackwell, Nora Boretti, Kevin Jackson, Greg Marchand,
Alison O'Neill, Jeff Rueckhaus, and Gretchen Snoey made key
contributions to this report.
(360606):
FOOTNOTES
[1] During fiscal year 2005, there were more than 1,356 bid protests
filed with GAO, compared with less than 70 with the U.S. Court of
Federal Claims. According to a DOE Associate General Counsel, DOE also
has significantly fewer bid protests filed in the U.S. Court of Federal
Claims than with GAO. The DOE official added that there had been less
than 10 of these protests filed over the last decade. Furthermore, DOE
neither lost any bid protest cases in this court during fiscal years
2002 through 2005, nor did the department take corrective action in
response to any cases filed with the court.
[2] After the contract has been awarded, DOE notifies both the
successful and unsuccessful companies and, upon request, conducts
"debriefings" on how their proposals were evaluated.
[3] Between fiscal years 2002 and 2005, a total of 5,397 bid protests
were filed with GAO, or an average of about 1,300 per year. Of the
cases resolved by a GAO decision on the merits, about 20 percent
resulted in a sustained decision.
[4] While the sample of contract awards reviewed did not allow us to
generalize to all of DOE's contract awards, they represent about 73
percent of the department's total contracting dollars for awards of $5
million or greater during fiscal years 2002 through 2005. Further
information on our scope and methodology is presented in appendix I.
[5] During fiscal years 2002 through 2005, of DOE's more than 5,000
contract awards, 39 were subject to bid protests filed with GAO. Of
these, 24--or about 60 percent--were denied or dismissed by GAO or
withdrawn by the company that filed the protest before GAO reached a
decision. For the remaining 15 bid protests, DOE took corrective
action, in response to a sustained decision in two cases and before GAO
reached a decision in the other 13 cases.
[6] For the 8 bid protests that did not result in corrective action,
the bid protest process did not cause a delay in the date of the
contract award. However, starting the work under the new contract may
have been deferred until the bid protest was resolved.
[7] As part of taking corrective action on this bid protest, DOE had to
revise the statement of work and issue a new solicitation. This was
necessary because the incumbent contractor had continued to perform
cleanup work under the existing contract, leaving less work to be
accomplished under the new contract.
[8] In addition, there were three bid protests filed with GAO during
this contract award process, with DOE taking corrective action based on
the first two protests. Overall, the final contract award was delayed 1-
1/2 years.
[9] Lack of consistent file documentation on headquarters review and
approval dates made it difficult to determine exactly how many contract
awards were delayed for this reason.
[10] Congress eventually passed legislation that became effective on
August 2, 2002, requiring DOE to award the contract for facilities at
both locations within 30 days. See Pub. L. No. 107-206, 116 Stat. 820,
§ 502 (2002). The contract was awarded on August 29, 2002.
[11] U.S. Department of Energy, Contract Reform and Privatization
Project Office, Analysis of the DOE Contractor Base: Readiness,
Willingness, Profitability and Trends--A Focus on the Environmental
Management Program (Washington, D.C.: January 2001).
[12] DOE's performance data for fiscal years 2003 through 2005 included
contracts valued at $100,000 or greater that DOE had awarded through a
competitive process. The fiscal year 2002 data included competitive
contracts with values between $1 million and $25 million. The data from
the 4-year period did not include the department's facility management
contracts.
[13] For additional information see GAO, Contract Reform: DOE Has Made
Progress, but Actions Needed to Ensure Initiatives Have Improved
Results, GAO-02-798 (Washington, D.C.: Sept. 13, 2002); GAO, Department
of Energy: Further Actions Are Needed to Strengthen Contract Management
for Major Projects, GAO-05-123 (Washington, D.C.: Mar. 18, 2005); GAO,
Nuclear Waste: Absence of Key Management Reforms on Hanford's Cleanup
Project Adds to Challenges of Achieving Cost and Schedule Goals, GAO-
04-611 (Washington, D.C.: June 9, 2004); and GAO, Hanford Waste
Treatment Plant: Contractor and DOE Management Problems Have Led to
Higher Costs, Construction Delays, and Safety Concerns, GAO-06-602T
(Washington, D.C.: Apr. 6, 2006).
[14] GAO, Framework for Assessing the Acquisition Function at Federal
Agencies, GAO-05-218G (Washington, D.C.: Sept. 2005).
[15] FAR Part 7.103(r) requires agency heads to implement processes for
ensuring that knowledge gained from prior acquisitions is used to
further refine requirements and acquisition strategies for future
contract awards.
[16] Because our study focused on DOE's process for awarding contracts,
we only looked at new contracts awarded during the four fiscal years
through a competitive or noncompetitive process. Our study did not
include contracts awarded prior to fiscal year 2002 that the department
renewed or extended in fiscal years 2002 through 2005 beyond the
initial period of performance. We did not include such contracts
because extending an existing contract eliminates the opportunity for a
competitive or noncompetitive award process to occur.
In addition, 3 of the 31 contracts in our sample actually represent
multiple contract awards resulting from a single contract award
process. For example, a contract award process carried out by DOE's
Savannah River location resulted in simultaneous award of 22 contracts
for environmental cleanup services. In defining our sample, we
represented such awards as a single contract in order to avoid
potentially overstating the extent to which the contracts we reviewed
had experienced delays.
[17] Results from nonprobability samples cannot be used to make
inferences about a population. This is because, in a nonprobability
sample, some elements in the population being studied have no chance or
an unknown chance of being selected in the sample.
[18] For certain types of contracts, in which the exact quantity of
goods or services needed during the period of performance is unknown at
the time of award, DOE may establish a maximum value for the contract.
We included six such contracts in our nonprobability sample that had a
maximum value of $5 million or greater. However, in determining the
total value of the contracts in our nonprobability sample, we
calculated the value of these six contracts as $0. We did so because
DOE reports the value of such contracts as $0, rather than reporting
the maximum value established at the time of the award. Accordingly,
the value of these contracts would also be $0 in DOE's calculation of
the total value of its contracts in fiscal years 2002 through 2005. We
relied on DOE's calculation in order to determine the percentage of the
total value of DOE's contracts that was represented by our
nonprobability sample. As a result, we remained consistent with DOE's
methodology, rather than potentially overstating the value of the
contracts in our sample by including the maximum value.
[19] For 4 of the 31 contracts in our sample, the department initially
awarded an interim contract, known as a letter contract, until issuing
a finalized contract at a later date. In these cases, we used the
letter contract date as the date of the award. According to officials
from DOE's Office of Procurement and Assistance Management and NNSA's
Office of Acquisition and Supply Management, letter contracts were
seldom used, but sometimes necessary, for awarding contracts and
starting the work more quickly. The officials also said that most of
the contents of the letter contracts are final except, most typically,
contract price, which is determined in the finalized version.
[20] DOE guidance from 2004 on preparing the required plans for
carrying out the remaining steps of the contract award process suggests
that the plan include a publication date for the plan, as well as
approval signatures and dates. For 19 of the 31 contracts in our
sample, we used the plans' publication date as the date DOE initiated
the contract award process. In four cases, in which the publication
date was not available, we used the date of the earliest approval
signature. In the remaining cases, in which neither of these dates were
available, we used the plan approval date listed in the plan's schedule
of dates for the process, or other sources. In addition, where only a
month and year were referenced, and we could not determine the full
date of a plan through any contract file documents reviewed in our
study, we assumed the action to be completed on the fifteenth day of
the month.
[21] Although we obtained file documentation for one of the 31
contracts in our nonprobability sample from DOE's Chicago Service
Center, we did not contact officials at that location because we spoke
instead with a headquarters Office of Science official involved with
the contract award process.
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